Digital Signature vs Electronic Signature

June 30, 2023 • Electronic Signatures • 6 minutes

When navigating the world of electronic documentation and agreements, you’re likely to come across the terms ‘electronic signature’ and ‘digital signature.’ It’s important to understand that while both terms describe ways to sign documents digitally, they are not the same.

In this article, we will delve into the definitions and characteristics of these two types of signatures and the differences between them.

What is an electronic signature?

An electronic signature represents a wide range of methods used to indicate a person’s agreement or consent in electronic format. It’s the digital counterpart of your traditional wet-ink signature and is used extensively in today’s business world. Whether it’s confirming an online order or signing a digital document, electronic signatures make the process quick and straightforward.

Key features of e-signatures

1. Convenience and Efficiency

Electronic signatures eliminate the need for physical documents and in-person signings, offering convenience, and accelerating the pace of business transactions. Imagine finalizing a contract with a partner located in a different country without the need to meet in person or mail documents back and forth.

2. Versatility

Electronic signatures can be used in a myriad of situations, from confirming receipt of a package to signing off on a corporate contract.

3. Legally Binding

E-signatures are legally recognized in many countries, making them as legally binding as their traditional handwritten counterparts for many types of documents. In the US, they are legal under the ESIGN Act, and in the EU, under the eIDAS Regulation.

4. Cost-Effective

Implementing electronic signatures often requires fewer resources than digital ones, making them a cost-effective solution for most businesses.

5. Security

While they may not employ the advanced encryption methods of digital signatures, electronic signatures, when used with secure platforms like Concord CLM, offer a high level of security.

6. Variety of Formats

There are different formats of electronic signatures. They can be as simple as a typed name, a clicked checkbox, or a signature using a touchscreen device. This range of formats offers flexibility depending on the requirements of the document or transaction

7. Different Types

E-signatures have different types and can range from ‘simple’ e-signatures, which may include scanned images of handwritten signatures, to ‘advanced’ or ‘qualified’ ones. The latter offer higher levels of security and are often used for legal documents or transactions involving sensitive information.

Electronic signatures are a versatile, convenient, and secure way of obtaining consent or approval electronically. Especially when facilitated by robust contract management software, they provide an efficient and cost-effective solution for most business scenarios.

What is a digital signature?

A digital signature is an advanced form of e-signature that provides extra layers of security and authenticity to electronic documents. It leverages encryption technology to ensure the authenticity, integrity, and non-repudiation of the signed document, much like the seal on a letter that gets broken if the content inside is tampered with. If you’re dealing with very sensitive documents, a digital signature may be your go-to tool.

Key characteristics of digital dignatures

1. Enhanced Security

Digital signatures use cryptography to secure both the document and the signature itself. This process creates a unique identifier (similar to a digital fingerprint) that verifies the signer’s identity and ensures the original document remains unaltered.

2. Tampering Detection

If a digitally signed document is altered in any way, the signature will show as invalid. This feature is like a high-security vault that sets off alarms when tampered with.

4. Non-repudiation

After signing a document digitally, the signer cannot deny their involvement in the transaction, ensuring accountability and trust in the signing process.

5. Legal Recognition

Digital signatures are legally recognized in many jurisdictions worldwide. They carry significant weight, particularly for highly confidential or legally significant documents.

6. Certificate-Based Identification

Digital signatures are linked with a certificate from a trusted Certificate Authority (CA). Think of it as a trusted third party vouching for the signer’s identity, similar to how a passport confirms your identity when traveling.

In essence, digital signatures are more secure than electronic ones. However, their implementation is much more difficult, and their cost is higher. In most business scenarios e-signatures are sufficient.

What is the difference between a digital signature and an electronic signature?

In short, an electronic signature is a broad term for any digital indication of consent or approval on a document, such as typing a name or clicking a button. A digital signature, a subset of electronic signatures, goes a step further by employing encryption technology to enhance security, ensuring the signer’s authenticity and that the document hasn’t been tampered with after being signed.

Therefore, while both signify agreement, digital signatures offer advanced security measures making them suitable for highly sensitive or legally significant documents. Now, let’s explore the differences between digital and electronic signatures in more detail.

1. Security and authentication

Digital signatures offer a higher level of security compared to electronic ones. They use public key infrastructure (PKI) technology, which means it is associated with the signer’s identity and includes a certificate from a trusted Certificate Authority (CA). This process verifies that the signature indeed comes from the person it claims to come from.

E-signatures, on the other hand, do not necessarily include this level of identity confirmation. However, in most cases, the security protocols of reputable electronic signature solutions are more than sufficient to ensure your documents’ integrity and authenticity.

2. Tampering detection

One of the significant differences between digital and electronic signatures is the ability to detect tampering.

The former not only confirms the identity of the signer but also ensures the integrity of the document. If a digitally-signed document is altered after signing, the signature will appear invalid, signaling the change.

Standard electronic signatures don’t inherently have this feature, but many types of CLM tools ensure the security of your documents after signing, keeping an audit trail of any modifications.

3. Implementation and cost

E-signatures are simpler and more cost-effective to implement. For instance, after creating an account on Concord, you can immediately start sending out documents for signing. Digital signatures, in contrast, are more complex. They require the use of special software and the procurement of certificates from a trusted Certificate Authority, which add additional costs and complexity.

4. Use cases

While digital signatures might be necessary for highly sensitive or legally significant documents, electronic signatures cater to a broad array of business scenarios. Whether it’s a sales agreement, internal approvals, or vendor contracts, the e-signatures of CLM software are often reliable, secure, and legally binding. However, make sure to select a platform that has strong security measures in place.

 

Digital vs Electronic Signature Side-by-Side Comparison

Clear and accessible table showing characteristics of a digital signature vs an electronic signature. The comparison points in the table between a digital signature and an electronic signature are: definition, security and authentication, tampering detection, implementation and cost, and use cases.

Digital signature vs electronic signature – which one should you choose?

The two signature types have different use cases and implementation costs. While digital signatures may be a great choice for certain highly sensitive legal documents, e-signatures are usually the preferred option for most business scenarios. They are secure, reliable, as well as easier, and cheaper to implement.

 

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